Can A Bank Refuse to Accept a Power of Attorney?

06/29/2009
- Power of Attorney
- State: MD #17252

Full Question:

My father executed his Power of Attorney on 11 May 2005. It was prepared by a lawyer. My stepmother is named as his Attorney-in-Fact. I am his daughter and was named his alternate Attorney-in-Fact. His wife is incompetent to manage his affairs now due to Alzheimers. I have tried to place his POA on the record at his bank after numerous confusions and delay as to it's authenticity, i.e., date of instrument and authorized copy. The impressed 'seal' does not come through on the photocopy as authorized by the POA. The bank is stating that he needs a POA with a 'current' dated copy. His condition with Parkinsons is a debilitating disease and he was diagnosed in 2004 and then he executed his POA in 2005. What authority does the bank have to deny acceptance? The notary that notarized the document's commission expired in 2007. I have been a notary for 30 years and I would think that anything that I notarized years ago are still good documents on the records. Is the bank just giving me the run around and don't know how to handle this POA?. I live in Maryland and my father lives in New Jersey. His POA was done in NJ. This is my third act dealing with family members and I have had no problem acting for a loved one. Also, can I attach a Physician's Statement as an addendum to the POA?

Answer:

The organization the agent is dealing with may decline to accept the power of attorney. Many banks and savings associations often have their own form of power of attorney for accounts at the institution. It is very common that a bank will insist their own forms be used and will refuse to accept any other power of attorney. New York has passed a law prohibiting a bank from insisting on the use of their own forms (see below link in case the bank is located in NY).

Many banks will not accept a power of attorney if the power of attorney is too old, or "stale." A power of attorney that is more than six months old may not be acceptable. While state law relieves any person or organization receiving a power of attorney from any liability in connection with the power of attorney, it still is not always accepted by everyone, despite the fact it is legal and valid.

Under some circumstances, if the third party's refusal to honor the POA causes damage, the third party may be liable for those damages and even attorney's fees and court costs. Even mere delay may cause damage and this too may subject the third party to a lawsuit for damages.

It is reasonable, however, for a third party to have the time to consult with legal counsel about the Power of Attorney. Banks will often have their legal department review it for approval. Depending on the time period involved, delay may become unreasonable. Upon refusal or an unreasonable delay, legal action may be required.

Third parties seek to limit their liability if there is a future problem. Some third parties refuse to honor POAs because they believe they are protecting the principal from possible unscrupulous conduct. Refusal is more common with older ("stale") POAs.

The following are NJ statutes:

46:2B-13. Reliance by banking institution on power attorney; grounds for
refusal

With respect to banking transactions, banking institutions shall accept
and rely on a power of attorney which conforms to this act and shall
permit the agent to act and exercise the authority set forth in this act,
provided that:

a. The banking institution shall refuse to rely on or act pursuant to a
power of attorney if

(1) the signature of the principal is not genuine, or

(2) the employee of the banking institution who receives, or is required
to act on, the power of attorney has received actual notice of the death
of the principal, of the revocation of the power of attorney or of the
disability of the principal at the time of the execution of the power of
attorney;

b. The banking institution is not obligated to rely on or act pursuant
to the power of attorney if it believes in good faith that the power of
attorney does not appear to be genuine, that the principal is dead, that
the power of attorney has been revoked or that the principal was under a
disability at the time of the execution of the power of attorney. The
banking institution shall have a reasonable time under the circumstances
within which to decide whether it will rely on or act pursuant to a power
of attorney presented to it, but it may refuse to act or rely upon a
power of attorney first presented to it more than 10 years after its date
or on which it has not acted for a 10-year period unless the agent is
either the spouse, parent or a descendant of a parent of the principal;

c. If the power of attorney provides that it "shall become effective
upon the disability of the principal" or similar words, the banking
institution is not obligated to rely on or act pursuant to the power of
attorney unless the banking institution is provided by the agent with
proof to its satisfaction that the principal is then under a disability as
provided in the power of attorney;

d. If the agent seeks to withdraw or pay funds from an account of the
principal, the agent shall provide evidence satisfactory to the banking
institution of his identity and shall execute a signature card in a form
as required by the banking institution;

e. If the banking institution refuses to rely on or act pursuant to a
power of attorney and the agent or principal has, in writing, provided the
banking institution with an address of the agent, the institution shall
notify the agent by a writing addressed to the address provided to it
that the power of attorney has been rejected and the reason for the
rejection;

f. The banking institution has viewed a form of power of attorney which
contains an actual original signature of the principal. Alternatively, if
the banking institution receives an affidavit of the agent that such an
original is not available to be presented, the banking institution may
accept a photocopy of the power of attorney certified to be a true copy
of the original by either

(1) another banking institution or (2) the
county recording office of the county in which the original was
recorded.

46:2B-11. Power of attorney to conduct banking transactions; acts
authorized

If any power of attorney contains language which confers authority on
the agent to "conduct banking transactions as set forth in section 2 of
P.L. 1991, c. 95 (C. 46:2B-11)", the agent shall have the following
authority under the power of attorney:

a. To continue, modify or terminate any account or other banking
arrangement made by or on behalf of the principal prior to creation of
the agency;

b. To open, either in the name of the agent alone, the principal alone
or in both their names jointly, or otherwise, an account of any type in
any banking institution selected by the agent; to hire, remove the
contents of or surrender a safe deposit box or vault space; and to make
other contracts for the procuring of other services made available by any
banking institution or safe deposit company as the agent shall deem
desirable;

c. To draw, sign and deliver checks or drafts for any purpose, to
withdraw by check, order, draft, wire transfer, electronic funds transfer
or otherwise, any funds or property of the principal deposited with, or
left in the custody of, any banking institution, wherever located, either
prior or subsequent to the creation of the agency, and use any line of
credit connected with any such accounts, apply for any automatic teller
machine card or debit card or use any automatic teller machine card or
debit card, including already existing cards, in connection with any such
accounts and apply for and use any bank credit card issued in the name of
the agent as an alternate user, but shall not use existing credit cards
issued in the name of the principal, on existing bank credit card
accounts of the principal;

d. To prepare periodic financial statements concerning the assets and
liabilities or income and expenses of the principal, and to deliver
statements so prepared to the banking institution or other person whom
the agent believes to be reasonably entitled;

e. To receive statements, vouchers, notices or other documents
from any banking institution and to act with respect to them;

f. To have free access during normal business hours to any safe
deposit box or vault to which the principal would have access if
personally present;

g. To borrow money by bank overdraft, loan agreement or promissory note
of the principal given for a period or on demand and at an interest rate
as the agent shall select; to give any security out of the assets of the
principal as the agent shall deem desirable or necessary for any
borrowing; to pay, renew or extend the time of payment of any agreement
or note so given or given by or on behalf of the principal; and to
procure for the principal a loan from any banking institution by any other
procedure made available by a banking institution;

h. To make, assign, endorse, discount, guaranty and negotiate for any
purpose all promissory notes, checks, drafts or other negotiable or
non-negotiable paper instruments of the principal or payable to the
principal or to the principal's order; to receive the cash or other
proceeds of these transactions; and to accept any draft drawn by any
person upon the principal and pay it when due;

i. To receive for the principal and deal in or with any trust receipt,
warehouse receipt or other negotiable or non-negotiable instrument in
which the principal has or claims to have interest;

j. To apply for and receive letters of credit or traveler's checks from
any banking institution selected by the agent, giving any related
indemnity or other agreements as the agent shall deem appropriate;

k. To consent to an extension in the time of payment for any commercial
paper or banking transaction in which the principal has an interest or by
which the principal is, or might be, affected in any way;

l. To demand, receive, obtain by action, proceeding or otherwise any
money or other thing of value to which the principal is, may become or
may claim to be entitled to as the proceeds of any banking transaction
conducted by the principal or by the agent in the execution of any of the
powers described in this section, or partly by the principal and partly by
the agent so acting; to conserve, invest, disburse or utilize anything so
received for the purposes enumerated in this section; and to reimburse
the agent for any expenditures properly made by the agent in the
execution of the powers conferred upon the agent by the power of attorney
pursuant to the provisions of this section;

m. To execute, acknowledge, seal and deliver any instrument in the name
of the principal or otherwise which the agent deems useful for the
accomplishment of any purpose enumerated in this section;

n. To prosecute, defend, submit to arbitration, settle and propose or
accept a compromise with respect to any claim existing in favor of or
against the principal based on or involving any banking transaction or to
intervene in any action or proceeding relating to the banking
transaction;

o. To hire, discharge and compensate any attorney, accountant, expert
witness or other assistant or assistants when the agent deems the action
to be appropriate for the proper execution by the agent of any of the
powers described in this section and for maintaining the necessary
records; and

p. In addition to the specific acts set forth in this section, to do
any other act which the principal may do through an agent concerning any
transaction with a banking institution which affects the financial or
other interests of the principal.